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What is Customer Financing?
How can a customer get the product without paying a penny? Customer acquiring goods and services without paying any amount to the seller or an enterprise is possible through customer financing.
For example, if any person purchased a new cell phone that they paid for on a payment plan or an EMI, the business from which the person obtained the phone offered them customer financing.
Customers require the products but can not afford to pay all the amount at once. Customer financing facility rescues the clients from such kinds of problems. It allows them to make low monthly payments for a prescribed period. There are oodles of payment options available, but customer financing is an integral part of any business or enterprise when it joins hands with an outside company that efficiently manages all the financial collections. It gives businesses more time to focus on selling their products and solutions while providing excellent customer service.
Consumer Financing Program for Small Businesses
They are designing Consumer finance solutions to help both MSME (micro, small-medium enterprises) businesses and consumers. The small business must integrate the customer financing services to attract the attention of potential customers. When a company offers the client financing, the customers can make purchases even if they do not immediately have the available money or credit card to cover them. It opens up the doors for more business resulting in more revenue.
Consumer financing is when a business offers funding to its customers. Offering consumer financing makes it possible for the customers to purchase the products or services they could not afford to pay upfront.
How Does Customer Financing Programs Work?
Customer financing is usually a business-to-customer (B2C) arrangement rather than a business-to-business (B2B) arrangement.
Is Consumer Financing Good For Small Businesses?
Many large businesses provide consumer financing. For instance, a person can finance a car purchase through any one of the major car manufacturers. Consumer financing is also available from some chain stores, home furniture stores, or large electronics stores. These are all large businesses that can afford a separate place or a department–and sometimes even an independent corporate subsidiary–to take care of the consumer financing.
But if a person is a small business owner, they might have only a handful of employees, and each employee is already busy taking care of the other things. Then how can a person provide consumer financing when they are already stretched so thin?
Then How to offer customer financing to customers:
Following these simple steps to provide the funding for the customers:
Review customer financing options and decide which one to offer.
Let the customers know about their financing options.
Customer financing applications:
If you do not involve a third party and provide in-house financing, it is crucial to evaluate and analyze customers’ creditworthiness. If a person has decided to work with a third-party consumer financing company, the company will approve or reject consumers.
Complete the sale target.
Collect all customer payments according to the payment plan agreement.
Customer Financing for Customers
Customer financing options to consumers provide businesses with one of the most effective tools to increase revenue. And the availability of lending programs that exist to meet the needs of different consumers, businesses, that is, both large and small businesses, have access to financing suitable for most of their current and future customers. Local businesses competing with large-scale department stores can also benefit from consumer financing programs. They show improved acquisition, retention, increase traffic, build brand awareness, and generate customer loyalty, which can dramatically impact and repeat business.
Customer Financing for Merchants
What trick could merchants or retailers apply for converting passive buyers into active customers? Customer financing could be a beneficial process through which potential customers have a greater probability of converting into loyal customers. Therefore it can thus boost sales and conversion rates. At the same time, it can also promote customer loyalty and repeat the business. Consumer financing gives the client confidence to spend more as they do not have to pay all at once. Therefore, it increases the items in the order, or customers purchase an expensive product they didn’t think of before.
Key benefits are:
- Boosts sales and conversion rates.
- Promotes customers loyalty
- Repeat business
- Increases average spend
Small Business offering Financing to Customers
Small businesses already have many things to manage. It needs to work with third-party financial companies so that small companies could easily manage all the finances. There are many companies like – ViaBill, Financeit, or Snap Finance. These companies offer a point of sale financing, where the customer borrows from these companies to make the purchase, and the business gets paid instantly. Small companies get benefits from making sales on credit without taking on financial risk.
If customers qualify this, the financing company will pay your business either in full for their purchases. Small businesses should opt for customer financing for enhanced and upgraded companies that will allow growing immensely.